Inheritance Tax

c98bf0ca

Hi,
I am due to inherit a property from my Aunt which would give rise to a substantial inheritance tax liability. What I'm wondering is whether it is possible for me to purchase the property from my Aunt for a nominal fee and then she can continue to live there but I will be the owner of the property and so would be able to avoid the tax on her passing.

Thanks.

glued

c98bf0ca wrote: »

Hi,
I am due to inherit a property from my Aunt which would give rise to a substantial inheritance tax liability. What I'm wondering is whether it is possible for me to purchase the property from my Aunt for a nominal fee and then she can continue to live there but I will be the owner of the property and so would be able to avoid the tax on her passing.

Thanks.

No. Disposal of the house now would result in revenue treating the disposal at market value. There is no way to avoid the tax. If you can't come up with the CAT then you should see a tax consultant for professional advice. You won't be able to avoid paying the tax unless you qualify for the dwelling house exemption.

Talk to a tax consultant. Don't end up with a huge CAT bill based on advice on the Internet!

dogsears

c98bf0ca wrote: »

Hi,
I am due to inherit a property from my Aunt which would give rise to a substantial inheritance tax liability. What I'm wondering is whether it is possible for me to purchase the property from my Aunt for a nominal fee and then she can continue to live there but I will be the owner of the property and so would be able to avoid the tax on her passing.

Thanks.

What you are suggesting is certainly possible but it would not be effective to avoid the tax. It might reduce it by a little bit temporarily. But you definitely need advice from a tax consultant as its a complex area.

However when you do speak to a consultant you may want to discuss whether the Dwelling House exemption might apply http://www.revenue.ie/en/tax/cat/leaflets/cat10.html

c98bf0ca

c98bf0ca wrote: »

Hi,
I am due to inherit a property from my Aunt which would give rise to a substantial inheritance tax liability. What I'm wondering is whether it is possible for me to purchase the property from my Aunt for a nominal fee and then she can continue to live there but I will be the owner of the property and so would be able to avoid the tax on her passing.

Thanks.

It's possible to receive the gift from your Aunt tax free, depending on the circumstances.

Gard1

if you pay under the market value for the property it can be deemed by revenue that the difference is a gift anyway. There are a few ways that the reduction can be made (Legally).
Using the thresholds available it may be possible. For instance: if you are married and both of your parents are alive she can gift the property to the 4 of you. You have the 30K allowance the blood relation of your parent has another 30k allowance your wife 15k and your other parent 15 k. The property is held in joint names and your parents will the property to you (or a transfer can take place after a certain number of years)
Say house is worth 200K and you take it on your own you have 30 k allowance so you pay 170k*33 % 56,100

House 200k split 4 ways
You 50k - 30k allowance = 20k x 33% 6,600
Mam 50k - 30k allowance = 20k x 33% 6,600
Dad 50k - 15k allowance =35k x 33% 11,550
Wife 50k - 15k allowance = 35k x 33% 11,550
Total cost 36,300 saving of nearly 20k

Mr. Incognito

These threads amuse me.

Every tax avoidance scheme you can think of is adressed in anti avoidance legislation. Gift splitting etc.

The answer is no.

Pay for professional advice. Read the charter. Please dont subscribe to these hair brained ideas. They cost twice as much to reverse.

dogsears

Gard1 wrote: »

if you pay under the market value for the property it can be deemed by revenue that the difference is a gift anyway.

Never mind being deemed as a gift by the Revenue - it is a gift and gift tax can arise.

There are a few ways that the reduction can be made (Legally).
Using the thresholds available it may be possible. For instance: if you are married and both of your parents are alive she can gift the property to the 4 of you. You have the 30K allowance the blood relation of your parent has another 30k allowance your wife 15k and your other parent 15 k. The property is held in joint names and your parents will the property to you (or a transfer can take place after a certain number of years)
Say house is worth 200K and you take it on your own you have 30 k allowance so you pay 170k*33 % 56,100

House 200k split 4 ways
You 50k - 30k allowance = 20k x 33% 6,600
Mam 50k - 30k allowance = 20k x 33% 6,600
Dad 50k - 15k allowance =35k x 33% 11,550
Wife 50k - 15k allowance = 35k x 33% 11,550
Total cost 36,300 saving of nearly 20k

What you are suggesting may or may not amount to avoidance (and all types of avoidance are not specifically addressed in the legislation but there is general anti-avoidance legislation as well) but it is certainly quite impractical and unlikely to be acceptable even to the people involved, never mind the Revenue.

OP - Take the advice above and see a professional (but do ask about Dwelling House relief to see if it might be applicable to you because its a relief provided for in legislation and if you qualify there is no taint of avoidance about it).